The Impact of Obama's Health Care Reform

Obama was right.  The health care industry needed, and still does need, reform.  Many many aspects of the industry are languishing under bad laws, bad incentives and bad practices.  We all need to understand that and move forward in some form of meaningful reform.  And there are ways to do it.  And there are ways NOT to do it.

One of the things that I’ve learned in the corporate world is that the best way to solve a problem is to mandate requirements; not solutions.  Unless you are the expert at a thing, the best method is to set out goals and expectations and then let the experts go and deliver.  This is a remarkably hard thing to do.  As a leader in the business world or in an organization, it’s easy to place the mantle of dictator on and just mandate the end game.  And even when you acknowledge the need to let the folks go and deliver, it can be very difficult to set expectations such they aren’t really “solutions” in disguise.

And so it was with Barack Obama and the whole health care debate.  He knew what he wanted.  He came to the table with solution in hand.  He wanted bi-partisanship, of that I’m convinced.  But his idea of it was that the Republicans had to accept his solution.  His only concern is what he would have to give to ’em to agree to it.  And they wouldn’t.

So in the end what we are stuck with is Obama’s “solution”.  If too many people don’t have insurance, just mandate that they all have insurance.  If people are being denied coverage because they already have a broken leg, just mandate that they can’t be denied for having a broken leg.  If the price of an insurance policy is going up too fast, just mandate that the price of an insurance policy can’t go up too fast.

Easy, right?

Not so fast.

It turns out that Obama has been sellin’ us a shiny new jalopy:

First, the shiny part:

The health-reform law caps how much insurers can spend on expenses and take for profits. Starting next year, health plans will have a regulated “floor” on their medical-loss ratios, which is the amount of revenue they spend on medical claims. Insurers can only spend 20% of their premiums on running their plans if they offer policies directly to consumers or to small employers. The spending cap is 15% for policies sold to large employers.

Next, the jalopy part:

One of the few remaining ways to manage expenses is to reduce the actual cost of the products. In health care, this means pushing providers to accept lower fees and reduce their use of costly services like radiology or other diagnostic testing.

To implement this strategy, companies need to be able to exert more control over doctors. So insurers are trying to buy up medical clinics and doctor practices. Where they can’t own providers outright, they’ll maintain smaller “networks” of physicians that they will contract with so they can manage doctors more closely.

The impact:

That means even fewer choices for beneficiaries. Insurers hope that owning providers will enable health policies to offset the cost of the new regulations.

Doctors, meanwhile, are selling their practices to local hospitals. In 2005, doctors owned more than two-thirds of all medical practices. By next year, more than 60% of physicians will be salaried employees. About a third of those will be working for hospitals, according to the American Medical Association. A review of the open job searches held by one of the country’s largest physician-recruiting firms shows that nearly 50% are for jobs in hospitals, up from about 25% five years ago.

Listen.  People throughout time have followed this one simple axiom:  They are always looking to maximize their own selfish best interests.  And when Obama mandated solutions that he had no business developing, what are people going to do in order to maximize their own self interests?

Defensive business arrangements designed to blunt ObamaCare’s economic impacts will mean less patient choice.

End.  Of.  Story.

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6 responses to “The Impact of Obama's Health Care Reform

  1. not being able to afford health insurance has left me sooooo many choices.

  2. not being able to afford health insurance has left me sooooo many choices.

    Hi cottage,

    But that is what I’m talking about.

    Instead of saying that we should mandate all people “get” health insurance and then see the train wreck that is sure to come, why don’t we instead say “How can we make it such that people can afford health insurance”?

    For example, when Maine mandated that all people who were Maine residents for 60 or more days couldn’t be denied coverage… the price of coverage sky rocketed. And fewer people have coverage than ever before. The exact OPPOSITE of what the goal was.

    I absolutely do NOT deny that insurance is too high. I just don’t think that Obama’s solution is going to bring it down.

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  5. One of the reasons it is hard to get insurance is one of my kids had chronic ear infections, Insurance companies want me to sign a ride so they do not have to pay for him in that capacity. Which means we cannot even get them to pay for an operation that would help decrease his problems.

    Pre-existing conditions no longer being a means of denying health care was/is really important to me. Plus I am tired of insurance that costs more than my monthly mortgage and does not cover enough.

    • Cottage,

      What folks fail to understand is that the cost of care isn’t changing. Just how we are insuring against it. So, for example, when someone doesn’t purchase a policy until they need it, the insurance company is going to have to raise the price of that policy to make sure they are able to remain in the business of providing insurance.

      With that said, both my little one had the same trouble it sounds like. We were finally able to alleviate the problem by having ear tubes inserted; the infections went away.

      Independent of our differences, be they related to health care or other topics, this father of 2 resonates with your little one’s ear aches. I wish you the best.

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